Forecast and technical analysis EURUSD on May 31, 2017.

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EURUSD: rate trading in a downwards channel for the 7th day

Previous:Trading on the Euro closed slightly up on Thursday. A daily pin bar formed as a result of rumours about Greece and the ECB. Greek finance minister Euclid Tsakalotos refuted the claims made in the article published by Bild about Greece's refusal to pay their debt to the IMF. The Euro later rose after rumours that when the ECB sits down on the 8th of June, they will discuss departing from their current lose monetary policy. The Euro restored to 1.1205 and closed trading at 1.1185 level.

Market expectations:

Two pin bars; one daily and one weekly. Daily buyers have risen up against weekly sellers. Our pair has now been trading within a downwards channel for 6 days. The rumours have pushed the price up to the upper boundary of this channel. In Asia, the Euro is trading slightly down, while the British pound has fallen by 0.31%. The EUR/GBP cross will keep the Euro from falling.

With the British parliamentary election fast approaching (8 June), trader attention is turned towards the opinion polls. The pound came under pressure last night after the publication of a survey by YouGov. According to their data, the Conservative party may fall 16 seats short of a parliamentary majority (326 seats).

Now, another important factor that could have a negative effect on the single currency in the European session. This morning, Chinese figures showed a rise in the price of oil. Following this, the commodity currencies also rose. Now, they've all erased their gains and are trading down against the US dollar.

The ISM manufacturing index for May has a value of 51.2 (forecast: 51.0, April reading: 51.2). The non-manufacturing index had a value of 54.5 (forecast: 54.1, April reading: 54.0).

On Tuesday the 30th of May, according to CME Group's FedWatch, the probability of a rate hike by the US Fed in June has risen from 84.2% to 93.5%. Considering all the factors that have been listed, I'm more inclined to buy Euros than sell them at the upper boundary of the channel.

Pin bars have recently started overlapping quite often, so in any case, it wouldn't be a bad thing if the price receded to 1.1152. If the US dollar continues to restore across the market, then it's possible that the Euro could slide as far as 1.1127.

The way I see things at the moment is as follows. The market changes every second. Media outlets fill the news with unconfirmed reports. This all has an influence on the dynamics of currency pairs and the potential to break technical models.

On Tuesday, trading on the Euro closed up. A pin bar has formed on the daily timeframe, while there is still an active bearish pin bar on the weekly timeframe. The M-model didn't work out as the Euro restored to 1.1205.

The Euro/dollar rate is currently trading around the lb balance line. Above, I've listed the factors that could have a negative impact on the Euro. The Euro is now being supported by the EUR/GBP cross, which made some gains after the publication of the YouGov survey.

The rate has bounces from the upper boundary of the channel. There's an hourly pin bar with a maximum of 1.1205 now in action. Because of this, my prediction for today is a drop for the Euro to the 67th degree at 1.1127.

It's worth keeping an eye on the price's behaviour as it reaches around 1.1152. If we see a sharp bounce, this increases the likelihood of quotes reaching above 1.12. If the upper boundary of the channel is broken through and the hour closes above 1.1210, then the case for a slide disappears.